People who own popular bars/clubs, what is your profit margin??

[gumball007]

I recently heard that alcohol at bars have insane profit margin. And as i observed it more and more, I feel like it seems true.

I live in a MCOL city. I recently went to a bar in a nice area and popular part of town.. I got a can of beer. I saw online that the manufacturer sells it for $12/ 6 pack so $2 per can. I was charged $7.50. That’s 375% higher than the cost. And I’m sure with cocktails, the margins are even higher.

Now I know that there’s operating costs involved such as paying employees an hourly wage, tips (for US bars), liquor licensing, utility and rent cost. But I can’t imagine that all the operating cost involved amounts to over 300% of the cost.

So what exactly is your profit margin with operating cost taken out?

 

[losllaves]

@gumball007 Anecdote: Pool hall owner and friend of mine said that from Monday through Thursday they lose money, in spite of daily leagues, tournaments, and the place almost never being empty.

Then they make it all back and then some on Friday, Saturday, and Sunday when the crowds of young, dumb idiots come through. The weekend keeps them in business.

 

[herlinoah]

@losllaves A cousin has a cafe in the bay area. He looks for live acts that are good but not too popular. Makes more money on those than when too popular, customers are not able to move around.

 

[teresita15]

@herlinoah What cafe?

 

[noiramrnslmc]

@teresita15 It’s called the Crooked Porpoise. Great toasties

 

[teresita15]

@noiramrnslmc Interesting. Lived in the city for a long time and never heard of it. I’ll check it out

 

[searchedfortruth]

@noiramrnslmc Can you post a link to the venue? I can’t find it using a google search?

 

[servant31]

@losllaves I had a bar and a cafe for many years. It was a tourist town and pretty seasonal. Over winter we had a small local clientele but I lost money throughout the winter but made good money over the silly summer season. Financially, I did alright but I wasnt rolling in it. I guess I made something like a 15%+ net depending on how you looked at it - better than if I'd left my money in the bank.

Couple of contributing reasons for staying open over the winter and accepting that I lost money - I didnt want a reputation for being closed and the missed opportunities that come with that. I needed to keep my clientele. Note they came to my place much more over the nice summer months and would go out less over the winter.

Secondly, I needed my good permanent staff over the busy summer and good permanent staff are hard to get - so I had to suck it up and keep them employed full time because most people want and need a steady income twelve months of the year. We'd schedule leave over the winter months to help keep those costs down but I'd have a poor business if I'd tried to rely on all my staff being seasonal employees.

Another thing to consider is in my part of the world at least, that 300% markup on a beer is still only $6 profit. You need to sell a lot of beers to pay the bills and make any money especially when you consider you have staff who arent selling beers all the time; you've got to pay the cleaning staff who don't sell beers, the admin staff who don't sell beers, kitchen staff who don't sell beers, even the bartender might spend an hour preparing to open before actually opening, you get the idea? That beer isnt just paying the bartender's wages alone.

 

[batshebav]

@servant31 Would you do it again with what you know now?